Hello,
I have been using Turbotax for over a decade to file our family's taxes.
We have two teenagers (13yrs & 15yrs) who we claim as dependents on our "married filing jointly" returns.
Last summer, my employee credit union offered "Teenage Certificate" accounts with free courses / webinars to help kids learn about saving, benefits of compounding and so on. So, we opened two accounts - one for each child - with my wife and I as joint account owners / "custodians"(?) till they turn 18yrs.
As expected, the employee credit union sent 1099-INTs for both accounts.
1. They 13yr old's account shows ~$100 in interest on the 1099-INT
2. The 15yr old's account shows ~$250 in interest on the 1099-INT. The 15yr old also started a part time summer job teaching tennis to kindergartners and has a W-2 with around $230 of wages.
Questions:
1) Do we need to report the interest earned on their certificate accounts? If so, what is the right way to report this?
a) Do we need to file a return for each child showing the 1099-INT. e.g. for the 13yr old, the return will only show the 1099-INT as income? OR
b) Since we claim them both as dependents on our returns AND because we are custodian's of their certificate accounts, would BOTH of their 1099-INT be reported on our return?
2) Do we need to file a separate return to report our 15yr old's W-2 income? No taxes were withheld by her employer.
Thank you for any input / guidance in advance.
Assuming all that income had their social security numbers and not yours, you and they need do nothing about any of that income.
Thank you for the quick response!
Yes, all the paperwork (1099-INT, W-2) are issued in their name and have their (partial) SSNs. I just wanted to confirm because when I first started my own job and was filing my taxes for that year (almost 25 years back), I was told by a banker that banks are required to report any interest over $10 to the IRS on 1099-INT and hence I may need to include those in my returns. Since my kids earned way more than $10 but did not have substantial (if any) income, I was wondering how that would work. Thank you for clarification.